PL/DCC Forex Trading Strategy

The PL/DCC forex trading strategy is a price action strategy that catches reversals in the market.

Adding some technical indicators to this wonderful pattern will transform it into a very potent and profitable system.

Its ease of adoption makes it a good pick for beginners and advanced traders alike.

Chart Setup

MetaTrader4 Indicators: Rads_MACD.ex4 (default setting), AMA_optimized.ex4 (Input Variable modified; periodAMA = 14)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Download the PL/DCC Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy order if the following indicator or chart pattern gets displayed:

  1. If the piercing line pattern form on the chart as represented by candlestick 1 & 2, price is said to be pushing higher i.e. a signal to buy the pair of interest.
  2. If the AMA_optimized.ex4 custom indicator forms blue dotted line, it is a signal of bulls pressure in the market, hence a buy trigger.
  3. If the Rads_MACD.ex4 custom indicator forms lime histograms above its 0.00 signal level, price is said to be aiming higher, as such, buy orders will suffice. Also notice that red histograms aligning above the 0.00 signal level is an indicator of bears trying to push price lower, although the overall sentiment still remains bullish.

Stop Loss for Buy Entry: Place stop loss 1-2 pips below the low of the pattern.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions holds sway:

  1. If the red dotted line of the AMA_optimized.ex4 custom indicator forms on the price chart as depicted on Fig. 1.0, it is a trigger to exit or take profit at once.
  2. If the histograms of the Rads_MACD.ex4 custom indicator aligns below the 0.00 signal level, price is said taking a U-turn from its earlier bullish stance, hence an exit or take profit is advised.

Sell Entry Rules

Enter a sell in the market if the following indicator or chart pattern gets displayed:

  1. If the Dark Cloud Cover pattern form on the chart as represented by candlestick 1 & 2 on Fig. 1.1, price is said to be pushing lower i.e. a signal to sell the pair of interest.
  2. If the AMA_optimized.ex4 custom indicator forms red dotted line on the charting window, it is an indicator of bears pressures i.e. a sell alert.
  3. If red histogram of the Rads_MACD.ex4 custom indicator aligns below its 0.00 signal level, price is said to be pushed lower, i.e. a signal to sell. If you notice lime histograms below the 0.00 level, it is bulls’ pressures in a largely bears market.

Stop Loss for Sell Entry: Place stop loss 1-2 pips above the high of the pattern.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following rules or conditions takes precedence:

  1. If the blue dotted line of the AMA_optimized.ex4 custom indicator forms on the price chart as shown on Fig. 1.1, an exit or take profit is advised.
  2. If the histograms of the Rads_MACD.ex4 custom indicator readjust to form above the 0.00 signal level, price is said making a U-turn from its earlier bearish stance, hence an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The Rads_MACD.ex4 is an enhanced Moving Average Convergence Divergence (MACD) indicator that is used in spotting changes in momentum, direction strength and duration of a trend in a currency pair’s price.

The AMA_optimized.ex4 custom indicator is a trend indicator that is built on the moving average. Its dotted blue line represent a bullish trend, while the dotted red line signals a bearish trend.

The Piercing Line and the Dark Cloud Cover refers to the bullish and bearish variations of the same two-bar pattern.

The first price bar of the Piercing Line pattern is bearish, the second opens below the low of the first candle and closes above the mid-point of the first candle.

The first candle of the Dark Cloud Cover pattern is bullish, the second opens above the high of the 1st candle, and closes below the mid-point of the first candle.

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